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Westminster Hall

Wednesday 24 July 2002

[Sir Michael Lord in the Chair]

Packaging Waste

Motion made, and Question proposed, That the sitting be now adjourned.—[Dan Norris.]

9.30 am

Mr. Bill O'Brien (Normanton): It is my pleasure to open this debate on the effects of the packaging waste regulations on the packaging industry. Such a debate is long overdue. I do not regard it as a political, them-and-us debate. I am sure that colleagues and members of the Opposition will want to raise issues that involve the packaging industry in their constituencies. The industry covers aluminium, glass, paper and board, plastic, steel and wood and it has been subject to European Union proposals and regulations since January 1998. Further proposals and targets have now been introduced, which, if implemented, could have serious effects on the industry and the economy of many regions and communities.

The various interests of the packaging industry are represented in the Chamber this morning. Nearly every constituency has some connection with waste packaging. My constituency contains companies that are involved in the plastics industry, the aluminium industry, the paper industry and the wood industry, and many others connected with packaging. Next to Coca Cola and Cadbury Schweppes is a large aluminium supply industry and, between them, they employ 900 people, so I have a significant constituency interest in the proposals.

The Commission is revising the targets for recovery and recycling, which are between 60 and 85 per cent. It originally suggested a target date of 2006, but there is a strong argument for it to be 2008. The all-party parliamentary group for the aluminium industry is concerned about the differentials that are being proposed and wants the overall recovery target set at about 20 to 25 per cent. and the target date as 2008, because that would give us more opportunity to meet those targets.

If the proposed increase in the targets goes ahead, it will be at considerable expense to the industry. The glass industry estimates that it could cost it about £200 million. It is disappointed that the United Kingdom target of 50 per cent. recovery for 2001 was not achieved. However, we must bear in mind the fact that the packaging directives were produced for two purposes. First, they will prevent member states from introducing measures that act as a barrier to trade and remove existing barriers to trade. Little action has been taken to remove existing barriers and new ones have been introduced. Secondly, the directives will reduce the impact of packaging on the environment and establish packaging recovery and recycling systems to enable member states to reach set targets. More than 48 per cent. of used packaging is now recovered in the United Kingdom. The 2001 target was 50 per cent., so we

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missed it by 2 per cent. The United Kingdom and France are the only member states that have properly implemented the part of the directive that encourages good design of packaging. The industry believes that the Commission should pay more attention to the trade barrier problem and, in the longer term, consider replacing the directive with non-legislative measures that would give more importance to issues that are not covered by the directive, such as wastage, transport and designing a complete packaging system for overall resource efficiency.

The current directive obliges the European Commission to produce proposals for new recovery and recycling rates. However, the industry has constantly argued that the right level of recycling cannot be decided in Brussels or even here in London because it depends on local factors, such as the proximity of reprocessing facilities, and that is more a regional than a national matter. In view of the fact that we are moving towards regional government, perhaps that issue could be covered by those who propose regulations.

Packaging recovery notes are a currency for recovery and recycling processes. The system is weak. Companies are failing to register their obligations and companies that do register are legitimately finding ways to minimise their obligations. We lack resources to police the system. There are three regulators—one covering England and Wales, one covering Scotland and one covering Northern Ireland—and therefore no set pattern for policing the system. Data are not consistent, transparent or timely. Targets are set late and last for only one year. Therefore, PRNs must be addressed seriously.

The price of paper PRNs is returning to the approximate price in 1998—£30 to £35 per tonne—although prices had fallen to less than £8 per tonne during previous years. In order to encourage more collection and to provide adequate recycling funds, PRN prices should be more closely matched to the true cost of collection and recovery. The PRN system failed to achieve a recovery target of 50 per cent. in 2001, and it will not achieve any new targets without improvements to the system. We should examine the system seriously.

The Advisory Committee on Packaging is criticised as being unrepresentative by the paper and plastics industries and by the industries that use other materials. The Department for Environment, Food and Rural Affairs must address the new proposals. The committee is not considered to be representative of all stakeholders. Companies, which pay millions of pounds each year in levies, are under-represented because of the number of recovery scheme members and regulators that are proposed for the body. Reprocessors lack an adequate presence on the committee. Each material is different, and the number of representatives of material industries should not be reduced. Will the Minister review the representation on the committee? The organisations that are involved with the industry should occupy the majority of the places.

There are suggestions for improving the system that applies to the industry in general, such as the creation of a commercially competent regulatory office. It is suggested that the industry should have one regulator, which could be called Offpack or Offwaste—whichever term is most suitable. The regulation process would be addressed better by one regulator. The regulator would

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take over responsibility for data management and for the preparation and timely dissemination of statistics. It would monitor and consolidate the business plans of compliance schemes to ensure adequate investment to achieve future recovery and recycling targets. It would audit the application of funds derived from the sale of recovery notes to set clear, consistent and accurate standards of data recovery and reporting to ensure that the regulations are applied consistently in the devolved parliaments and regions of the United Kingdom. We should therefore give serious consideration to changing the current system to an overall regulator.

I am aware that there are others who wish to contribute today so I shall not take my full 20 minutes. That should allow people to express their views on the industries that they represent.

At 41 per cent., packaging waste has one of the highest recycling rates in the total waste stream. Does the Minister intend to make changes to the UK packaging regulations to make them less complex and bureaucratic, and to ensure that there is better enforcement and monitoring? Will he consult the industry on the common position proposed by the European Parliament prior to the meeting of the Council of Ministers in October?

The Secretary of State told the House that she and her Ministers supported the compromise of the outgoing Spanish presidency, which included some differential material targets that were even higher than those proposed by the European Commission. The UK industry has made its feelings known about the recent consultation exercise and Members of Parliament support the industry on the basis of observations that have been presented to the Department. Does the Minister intend to maintain that position at the meeting of the Council of Ministers in October? The matters I have mentioned are important to the industry and it would be helpful if the Minister could address some of my concerns.

Recent media reports have indicated that for the domestic waste stream to be improved there will need to be an extra charge on domestic households. Reference has been made to a possible cost of £1 or £5 a bag for extra waste that may be collected, which would create problems for local authorities.

We must address the question of helping local authorities to meet their recycling and composting targets. Without the support of local authorities, the regulation targets on reducing, collecting and recycling packaging would be more difficult to meet. I urge the Minister to focus on improving the performance of the regulations in order to achieve recovery and recycling targets in the future.

9.43 am

Jonathan Shaw (Chatham and Aylesford): I congratulate my hon. Friend the Member for Normanton (Mr. O'Brien) on securing an important debate. He referred to many of the industries in his constituency. My constituency is the largest area in the UK in which paper and board are manufactured. The industry produces some 1.4 million tonnes every year and employs some 1,000 people. I have declared an interest in the industry in the register.

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The debate is important, both for industry and the environment. The packaging waste regulations, packaging waste recovery notes and packaging export recovery notes are not something that my constituents write to me about a great deal, but they complain about the amount of packaging that surrounds things that they buy in supermarkets and other retail outlets and they ask me what the Government are doing about that.

The packaging waste regulations are an important and significant development in the reduction of waste and the recovery of fibre that will allow us to recycle more waste. Industry must play its part. The benefit of the PRN system is that it is relatively cheap. While the PRN system has not achieved the 50 per cent. recovery target that was referred to by my hon. Friend the Member for Normanton, there has been a step change since its introduction. There is no need to scrap the system and start again, but we should review it regularly, monitor its effectiveness, find improvements and modify it.

The paper industry has complained that, as my hon. Friend, the Environment Agency is not properly or adequately policing the system. It is said that some companies simply ignore their obligations while others are unaware of them. How far does that extend to UK companies? How many are involved? What is the mass of the recovered fibre involved? Perhaps my right hon. Friend the Minister will enlighten us.

It is important to establish fact and dispel myth in the debate. The question is how to improve registration of companies with regulations. One proposal is that all companies should opt in and be given a certificate to opt out, rather than having to opt in, as happens at the moment under what might be described as a voluntary system. My right hon. Friend the Minister might balk at the consequential red tape that would be imposed on British industries, but the matter is worth consideration in trying to find ways in which to increase the number of companies that register. Does he have a view?

We must be more rigorous. The recycling rates to which my right hon. Friend the Minister referred have been described as pathetic. He has put in place tough targets, and PRNs need to be applied more rigorously. Elsewhere in Europe, recycling rates are much higher and systems are more rigorous.

It is vital that more people register if we are to generate the much-needed reprocessing infrastructures to which my hon. Friend the Member for Normanton referred. It is a vital and fundamental part of the scheme to generate that infrastructure to encourage investment and increase recycling targets.

We should not think that nothing is happening in the country. Industry is playing its part. In my constituency, SCA recently invested £17 million in a recovered fibre plant as a result of the PRN system, and it has specially designed vehicles to collect waste from all 410 branches of Sainsbury's. Once again, the paper industry is leading the way and demonstrating its sustainable credentials. It is increasing capacity, while the number of paper and board mills has reduced in recent years: 81 now operate. In the face of the strength of the pound, which has severely affected the paper industry, and gas prices, which have doubled, and despite other regulations, the industry is making great strides.

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Is my right hon. Friend the Minister satisfied that the Environment Agency is policing companies that have a turnover of £2 million and produce more than 50 tonnes of packaging, which requires them to register? Might the Department for Environment, Food and Rural Affairs and the Department of Trade and Industry work in partnership? Have any discussions been held on how to ensure that companies comply and are aware of their obligations?

We should not regard the new requirements as a threat. There is great opportunity for developing and improving infrastructure. Investment in the green economy is vital if we are to meet the targets and protect our environment. Rigour is required, and tough decisions must be taken now—we cannot wait forever and a day before we take them.

We must also address the situation in a sustainable way. We do not want any unnecessary impact on our industries that would result in them going out of business. My hon. Friend the Member for Normanton referred to the development of more infrastructure. The Government recently provided a grant to Shotton paper mill in Wales for an expansion of newsprint. I was involved in the discussion about that. The grant went to the wrong company; it should have gone to Aylesford Newsprint. I make no apology for my parochial perspective on that.

As my hon. Friend said, it is vital that all stakeholders are involved in reviewing the current arrangements. Reprocessors must play a greater role on the advisory committee. I am keen to hear what my right hon. Friend the Minister has to say about that. If he is looking for names, I am sure that the Paper Federation of Great Britain would be more than happy to provide them.

I turn to the packaging export recovery notes. There is concern in the paper industry that the amount of waste that is being exported is rising considerably—by 59,000 tonnes in 2000 to just over 179,000 tonnes in 2001, and reports suggest that that figure will rise higher. Waste merchants are able to receive PERNs; the total amount over the past year or so is £80 million. We want that to be invested in reprocessing infrastructure. Does DEFRA have a breakdown of where that investment is going? That issue is causing debate among waste merchants and in the paper industry.

The PERN has made it more favourable for waste merchants to export material; it costs £60 to hire a container to China, which is very cheap. Paper mills are in a perverse situation; because so much waste is being exported, they are having to import it as they are unable to get sufficient supply from the domestic stream. This is a market system, but we have to make it work; we must look at whether the market is allowing us to operate in a sustainable way. My right hon. Friend the Minister should also look at when the targets are announced. It is difficult for companies to plan, if they do not know well in advance what next year's target will be.

The waste merchants will argue that, as a direct result of PRNs, the major UK mills have enjoyed very low prices in recent years. We live in a free market, and the basic laws of supply and demand apply. If someone is willing to pay so much for waste, it will go to them—it will go to the highest bidder. We must ensure that we get the very best out of the current system. The packaging waste regulations are important. They have made a step

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change, but much more needs to be done to bring people together so that we get the very best out of what we have, and produce improvements—rather than cause too much damage—to all areas of industry.

9.54 am

Gregory Barker (Bexhill and Battle): I congratulate the hon. Member for Normanton (Mr. O'Brien) on securing the debate and bringing forth a broad discussion on the important and often overlooked matter of waste.

The packaging industry has suffered from clumsy, burdensome and extremely ineffective regulation, but waste, particularly the waste produced by that industry, is a political issue that goes beyond the interests of just one industrial sector. It affects us all, and my constituents cannot understand why more is not done to control effectively the amount of waste that we produce as an industrial nation. Why do we not do more, and why is the action that we do take not more effective? Why can other European countries get a grip on the amount of waste that they produce—I am thinking particularly of what happens in Germany—yet we seem to be stuck like rabbits in the headlights of oncoming cars?

The Government are usually very much in touch with public opinion. Indeed, they pride themselves on their ability to read the public mind, yet in this respect they are greatly out of step with the public mood. Over-regulation has, in some areas, led to the demise of simple, local solutions for recycling. I am referring not to the regulations that we have heard about, but to fire regulations, for example.

In the past, the usual way to carry away goods from a supermarket was to pick up a brown cardboard box that had been brought out of the storeroom and kept at the checkout. People would load in their produce and carry it away, but now, invariably because of planning or fire regulations, that regime no longer exists. A much larger mountain of waste is created, and the practical, simple and local solutions are actually leading to a greater amount of waste and greater problems in disposing of it. In Bexhill and Battle, people are particularly impatient with the failure to get to grips with the excess waste that is produced because we face the prospect of one or two incinerators in the constituency. People cannot understand why more is not done.

We were told that this would be the greenest Government ever but, sadly, Britain still ranks near the bottom of the international recycling league of developed nations. That is partly because, although many local authorities such as Wealden, which covers part of my constituency, do a terrific job of getting to grips with recycling, there is a lack of political will at the centre to get a grip on the much larger picture, which incorporates packaging and minimisation. It is no good local authorities increasing recycling by themselves, if people are not looking at the bigger picture to control on waste problems and we continue to allow the amount of waste that we produce to rise, as it has under this Government.

We must consider much more critically not only how we can improve recycling, but how we can bear down on the whole waste hierarchy. We must cut through the

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plethora of EU and domestic regulations, and create an effective framework to cut down on wasteful packaging and tackle waste at its source. Simple regulation that works with the industry invariably works best. We need better and more effective regulation that does not burden companies, but encourages them to minimise waste responsibly.

Unfortunately, as I have said, most of the goods that we now buy involve much more packaging than was traditionally the case. Indeed, packaging is now estimated to form up to half the volume of municipal waste in western Europe. As we have heard from other hon. Members, the packaging and packaging waste directive that was adopted in 1994 had to be implemented by June 1996. The targets for recovery and recycling of packaging and packaging waste by June 2001 were to recover at least 50 per cent. by weight of packaging, and to recycle at least 25 per cent. by weight of the totality of packaging materials contained in the waste, with a minimum of 15 per cent. by weight for each packaging material.

Any business handling more than 50 tonnes of packaging with a financial turnover of more than £2 million is affected by the regulations if it performs one or more of the following activities: manufacturing raw materials for packaging; converting materials into packaging; filling packaging; selling packaging to the final user; or importing packaging or packaging materials into the UK.

At the outset, businesses such as packaging manufacturers and retailers were obliged to recover 52 per cent. of packaging waste by 2001, and recycle at least 16 per cent. of each material category. Targets for 2001 under packaging regulations were 56 per cent. for recovery and 18 per cent. for material-specific recycling and packaging waste. Businesses will have to meet targets of 59 per cent. for recovery and 19 per cent. for material-specific recycling of packaging waste under the packaging waste recovery and recycling targets set for 2002. When those targets were set, the Minister claimed that the UK had done well so far. There had been 36 per cent. of recycling and 42 per cent. of recovery of packaging waste by the end of 2000, and improvement in recovery of 12 per cent. since 1998. As I said, however, the UK still lags behind the rest of Europe in recycling and recovery rates.

In April 2001, a Friends of the Earth study found that the packaging directive had not led to any significant increase in the recycling of packaging. It stated:

In April 2002, the Minister admitted that compliance schemes were not working at optimum levels when he chastised the second largest scheme in the UK for not meeting targets. In 2001, the PERN system revenue to accredited exporters for paper packaging waste was £3.3 million, compared with PRN revenue to accredited reprocessors for paper packaging waste of £32 million. However, as my hon. Friend the Member for Mid-Bedfordshire (Mr. Sayeed) highlighted, the large-scale export of plastics to China by some waste collection

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companies has allowed the system to be distorted, which means that even the UK's existing plastics recycling capacity is not being used.

Once packaging waste generators have rid themselves of their PRN obligations through waste retrieval firms, they can absolve themselves of further responsibility. Furthermore, the current system places no obligation on firms to search for more environmentally friendly and easily degradable forms of packaging. The motives behind the recovery system are clearly honourable, but the problems highlighted today must be addressed. It is essential to create a climate of opinion that presents achieving a better, more sustainable environment as a great opportunity rather than a chore. That will mean more carrots for the companies, local authorities and people who do the right thing, and fewer sticks that all too often miss their targets.

We need to measure and quantify the effectiveness of the system, not just introduce more and more regulations. We must also align people's best interests with their self-interest, and make it easier for companies to do the right thing for their local communities, which ultimately must shoulder the consequences of excess packaging and the failure to curb the growth of waste. We need better, more effective and less clumsy regulation. The target dates that the EU has set are drawing closer. The public are demanding action, and the Government will ignore them at their peril.

10.4 am

Mr. Tam Dalyell (Linlithgow): Mr. Cook, I will ask my right hon. Friend the Minister two questions, and comment briefly on the second. First, given that the major part of the growth in the UK packaging and recycling industry will need to come from household waste, what steps are being taken to ensure that household collection will be expanded sufficiently to meet future higher targets?

Secondly, what is the economic and environmental justification for the proposed different material-specific recycling targets of 60 per cent. for glass, 55 per cent. for paper, 50 per cent. for metals and 20 per cent. for plastics? I would like to know whether that is a fair division between materials, and whether it will achieve the desired result of the 55 per cent. minimum targets over the whole base.

On 8 May, some of us in the all-party aluminium industry group heard Nick Kendal say that the European Union packaging waste directive is about to be revised, and that he was worried that Orwellian tones were "abroad" within the Commission's current proposal. He said:

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I would like a comment on that issue, and on one other matter. The Dutch Member of the European Parliament, Dorette Corbey, who was responsible for steering the directive revision through Committee, opposes material-specific targets for which the Commission has not demonstrated any advantages. The United Kingdom Government apparently share that opposition. I would like to know what has happened to her amendment setting an equal minimum 25 per cent. for all materials, while raising the overall recycling target into the 55 per cent. to 65 per cent. range. What is the Government's attitude to that proposal?

10.7 am

Mr. Eric Illsley (Barnsley, Central): Mr. Cook, I rise to—

Mr. Deputy Speaker (Mr. Frank Cook): Order. I would be remiss in my duties were I not to remind the hon. Members that, in its decision to assume these proceedings in Westminster Hall, the House also took the decision that the four senior Members of the Chairmen's Panel should be referred to, when occupying this seat, as "Deputy Speaker". If I were to allow this misdemeanour to continue, trivial though it may be, the expressions of amusement on some faces in the Chamber might turn to dismay. I would not want that to happen.

Mr. Illsley : I apologise for my error, Mr. Deputy Speaker. I was following the Father of the House and compounding his error. I seem to be starting my remarks between a rock and a hard place.

I will make a few comments regarding the glass industry, but would first like to congratulate my hon. Friend the Member for Normanton (Mr. O'Brien) on securing the debate. As he pointed out, all hon. Members have an interest in packaging waste, and therefore should have an interest in the packaging waste regulations. The issue affects all of us.

My constituency has a major glass manufacturing operation, known as Rexam Glass. Glass manufacturing is important to the constituency; indeed, the glass bottles that are on the table this morning were made in that factory. As regards packaging waste, glass is in a unique position.

Mr. Dalyell : I cannot let go the fact that the water comes from near my constituency, and the water is equally as important as the glass.

Mr. Illsley : I thank my hon. Friend for that comment. I am reminded of when we used to have different mineral waters—Highland Spring, Ashbourne, Malvern and Cwmbran—because of the intense jealousies between the various nationalities within the House. We now have House of Commons water, which fills the bottles made in my constituency.

To recap, glass is in a unique position in terms of packaging waste. The glass container industry reprocessed some 600,000 tonnes of post-consumer glass waste in 2001. It is a basic raw material in glass manufacture, sought by the glass industry on that basis. It is an easy material to recycle into another product. The collection is something else, but it is what we call a

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primary closed loop recycling system. Such recycling in 2001 saved the quarrying of 700,000 tonnes of raw material—the energy equivalent of 77 million kW hours and reduced carbon dioxide emissions by the equivalent of 132,000 tonnes, avoiding almost 600,000 tonnes of landfill. That type of recycling—the primary closed loop system—is unique to the glass industry: if replicated, it would exemplify best practice. The UK glass container industry currently recycles approximately 33 per cent. of the container waste stream. It has been involved in such activity for the past 25 years. Recycled glass is a primary material in the construction of new glass.

As we have heard this morning, the revision of the packaging and packaging waste directive under discussion in Brussels could result in a 60 to 70 per cent. target—a significant increase—being imposed on the glass industry by 2006. That scale of increase in targets within such a time scale has been achieved in mainland Europe only through significant Government intervention and by placing great onus on local authorities and the consumer to achieve compliance. The container glass industry estimates the cost of achieving the new target at £200 million. For an industry that has witnessed a halving of profitability over the past five years, that is a huge cost burden, which the industry is unlikely to be able to manage.

The glass industry already possesses the capacity to reprocess and recycle 50 per cent. of the UK's glass container waste. Facility improvements and capital investment in two new reprocessing plants can go ahead only if the glass industry can be assured of increased supplies of good quality raw material. In other words, we can recycle more glass only if the facilities are there to process and use it. If new manufacturing plants come on stream, we will be able to increase the amount of recycled products. That complicates the target: industry can recycle only certain amounts because they are used in the manufacture of new glass products.

For the closed loop recycling system to work, the glass industry requires the Government to encourage the increased collection of colour separated waste. British Glass, the glass manufacturers' trade organisation, urges the promotion of this form of collection, whether from bottle bank sites or from kerbside collections. The colour separation argument is important. If glass is not colour separated, recycled glass can produce only green glass. Clear glass or amber glass can be produced only from recycled amber or clear glass. If two or three are mixed together, the resultant product is simply green. It leads to mountains of green glass cullet, which the industry simply cannot use.

About 50,000 bottle banks currently exist in the UK, which is equivalent to one per 2,700 head of population, which compares to a European average of one to 1,000. I am pleased that the first-ever bottle bank was placed in my constituency in 1970, hence the 25-year recycling history. Kerbside collection of glass is available to only 10 per cent. of United Kingdom households and most of the studies show that access to kerbside collection immediately doubles recycling of post-consumer glass waste. Further investment within the UK in kerbside recycling systems is desperately needed.

The term bottle bank is a misnomer, but the industry is stuck with it. It should be renamed glass bank, which would encourage people to recycle other glass

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containers such as jam jars and so on. People seem to think that they are restricted to recycling only bottles in bottle banks.

In 2002, the glass industry will spend about £425,000 on education and the promotion of glass recycling, but that is not nearly enough to persuade target audiences to recycle more by using kerbside and other schemes.

Mr. Roy Beggs (East Antrim): Does the hon. Gentleman agree that, by and large, consumers want to play a full part in recycling if given the opportunity to do so? Responsibility for providing the opportunity comes down to the efforts being made, or not made, by local councils.

Mr. Illsley : I agree entirely with the hon. Gentleman. More effort by government and local authorities is needed to provide systems to enable us to meet the targets that will be imposed from 2006. Those huge increases in recycling targets will be met only if the systems for recycling are in place. By the same token, local authorities will need extra resources from the Government to be able to make the schemes work.

I want to mention some of the problems facing the glass industry in relation to recycling. Surprisingly, one of those problems is the newly introduced aggregates tax. Although the glass industry obtained relief from paying the tax, it is now beginning to suffer significantly as a result of the aggregates industry seeking supplies of glass container waste for use as an aggregate in road building. That means that aggregates companies avoid paying the tax, but also benefit from receiving packaging recovery notes income. The net effect is that the glass industry will receive less PRN revenue for investment in the collection infrastructure, promotion and education and might even be forced to have to purchase PRNs to cover its own obligation, which will be a further drain on its resources. It will also result in a significant under-utilisation of reprocessing and recycling facilities.

The glass industry is extremely concerned at that turn of events, which will also increase the industry's energy costs and pollution levels, and could in turn lead to it being penalised under the climate change levy and the integrated pollution prevention and control legislation.

Mr. Bill O'Brien : As my hon. Friend referred to the climate change levy, I want to refer to a letter sent to the Chancellor of the Exchequer on 8 May by the plastics industry—I accept that it is not the Minister's responsibility but it should be on the record. It suggests that very few plastics companies are able to obtain voluntary agreement to secure the climate change levy rebate and only one fifth of the levy is offset by the reduction last April in the employers' national insurance contributions. The effect of the reduction in the national insurance contribution is negative in this respect. Will my hon. Friend take that on board and associate the plastics industry with the glass industry?

Mr. Illsley : I am grateful to my hon. Friend. I was about to come to that very subject. As I have said many times in the House, the climate change levy has had a

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disproportionate effect on the glass industry because, although in some circumstances it qualifies for the 80 per cent. rebate, the tax imposed on the industry is still substantial. In 2002 it is estimated that the net cost to container manufacturers will be £1.8 million. Everyone agrees that we should support Kyoto targets on reducing our emissions and producing a cleaner environment, but that should not be achieved at the expense of certain industries in our country. The burden should be spread throughout the country, and not placed only on the manufacturing industry.

Gregory Barker : Does the hon. Gentleman favour a carbon tax as a fairer way of working?

Mr. Illsley : No, I do not favour a carbon tax, but I would prefer a fairer system than the climate change levy, which unfairly affects manufacturing industry. It has caused huge costs to manufacturers in the glass industry, and some container glass manufacturers have based future energy reduction programmes, required by the CCL, on increased levels of recycled glass used in manufacture. If recycled glass sources reduce or even dry up, sections of the industry could find themselves liable to the CCL at 100 per cent. Its impact would be extreme and could put them out of business.

On the integrated pollution prevention and control regulations, the glass industry is committed to reducing polluting emissions, including carbon dioxide. The increased use of recycled glass as a raw material helps to achieve that, because less energy is used in re-melting cullet or recycled glass. If the industry experiences a shortage in supplies of good quality colour separated recycled glass, it could be forced to install electrostatic precipitators, which will cost the industry about £30 million and increase energy consumption by about 3 per cent. per annum. Again, an extra financial burden will be imposed on the industry if we cannot secure that supply of glass.

Another solution would be for glass manufacturers to consider importing recycled glass from abroad simply to meet the IPPC and CCL targets. The industry believes that that would be a retrograde step when a potentially good UK source of recycled glass exists, which will either be disposed of as landfill in the domestic waste stream or used as road aggregate.

My hon. Friend the Member for Normanton spoke about the revision to the packaging waste directive, and I wholeheartedly endorse his comments. As most hon. Members have suggested, the glass industry does not support the idea of differentiated material specific targets, as they are likely to lead to competitive imbalances in the packaging sector. For example, the current proposal to give plastics a target of 20 per cent. compared with a 60 per cent. target for glass would give the plastics industry a huge advantage over the glass industry. We saw the advent of the PET glass containers some years ago, when drinks manufacturers put their product into plastic rather than glass containers even though plastic is more difficult to recycle. Once recycled, certain forms of plastic cannot be used as a food container, whereas anything made of glass has the advantage of being reusable.

The plastics industry could achieve that 20 per cent. target through recovery from industrial waste only, which would give the packet fillers and retailers who

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specify packaging types a much lower supply chain obligation. The glass industry maintains that if it is going to meet 60 per cent. targets for 2006, we must examine the domestic waste stream to recover that level of material. That brings me back to the systems that we need to have in place—the kerbside recovery schemes and so on—to get the material from the domestic, rather than the industrial, stream.

Mr. Bill O'Brien : I think that the issue that my hon. Friend is driving at is the importance of long-term planning. We need activities and investment to drive up the collection and recovery capacity for household waste. Although there are highly complex systems in place, my hon. Friend is right to suggest that there must be long-term planning from local government, central government and private operators. If we get that long-term planning, we cannot fail.

Mr. Illsley : I am grateful to my hon. Friend. We must consider not only long-term planning but the impositions that we have placed on various industries. In terms of the climate change levy, those impositions were well intentioned; however, we may find that they affect our attempts to recycle and recover materials. For example, energy costs and national insurance contributions have increased for the manufacturing industry. Other burdens, such as the climate change levy, have been put upon it, too. Unless there is real joined-up thinking about our environmental, recycling and recovery targets, we are giving industry advantages with one hand but taking them away with the other by imposing measures such as the climate change levy and IPPC regulations.

I echo the conclusions of my hon. Friend the Member for Normanton, who drew attention to the fact that companies are failing to register obligations, or are finding ways to minimise them. Of course, we must consider issues such as giving some companies a minimal obligation—such as plastics at 20 per cent.—resources for policing the system, bringing in kerbside collection schemes if necessary, and getting packaging waste out of the domestic waste stream. Companies in my constituency make the point that, across the European Union, there is no consistent data with which to compare and contrast the countries that are meeting their recycling targets and those that are not. We need to reconsider that.

I look forward to hearing the Government's response, particularly to the questions posed by my hon. Friend the Member for Normanton, who deserves our congratulations on initiating this timely debate.

Several hon. Members rose—

Mr. Deputy Speaker : Order. We usually start the winding-up speeches 30 minutes before the conclusion of the debate, and apportion time equally between the three main speakers. I hope to allow the Minister a couple of extra minutes this time, because there are lots of questions to answer.

10.28 am

Sue Doughty (Guildford): Thank you, Mr. Deputy Speaker. I shall do my best to keep within a sensible amount of time.

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I congratulate the hon. Member for Normanton (Mr. O'Brien), not only on securing the debate but on explaining so clearly the problems faced by the packaging industry. We are not without sympathy for those problems. Packaging and the interim processes that we go through to get goods are absolutely essential. We must recognise that. It is easy for environmentalists to say "Packaging—no, no, no.", but the issue is really one of appropriate levels of packaging and recycling, and making sure that we are using materials as wisely as possible. The packaging industry needs encouragement to do so and to fulfil its obligations.

However, many problems are a result of giving responsibility for such matters to the producer. The Government are more or less throwing the issue over the wall to the producer without saying how targets are to be achieved. There are problems with moving targets. What is the target for 2001? Is there a target for 2006, or for 2008? We also need to consider interim targets, because if the packaging industry it to achieve what is being asked of it, it needs to know what the steps are along the way and how it is going to get there. We must also make sure that there are incentives for those involved with the recycling and materials recovery business to see that it has a long-term future and is worth investing in. Without support, that will not happen.

We have packaging waste regulations, but I have read that there are some in the packaging industry who feel that they are an anonymous European Commission directive, brought down from on high to upset everybody. Of course, that is not the case. One of the biggest problems facing this planet, along with over-population, is the mountain of waste, which is growing enormously year on year. We must not only arrest its growth but reverse its increase.

We have many problems with targets. How are they to be achieved? The former Department of the Environment, Transport and the Regions announced on 21 November 2000 targets of 56 per cent. recovery and 18 per cent. material-specific recycling for businesses, obligated by the UK regulations. It took until May 2002 to get the figures for 2001 performance from the Government, despite endless parliamentary questions to try to drag that information from them. Can the Minister tell me why it took so long to make those figures available? How can we know how we are performing, if we do not have the information? Even if the news is bad, we need information so that we can put in place the necessary measures to improve performance. Typically, we failed to achieve those targets. If we failed to meet those modest targets, can the Minister tell us how on earth we are to meet the much more challenging 2006 targets? What will be done to help the packaging industry achieve those?

Wastepack, one of the compliance schemes, has failed to obtain recovery certificates to match even half its obligations. What changes will the Minister make to ensure that such compliance scheme failures do not occur in future and that the Government are alerted sooner to potential problems? Underscoring that is the need for interim monitoring and reporting.

Businesses need to know the targets in order to plan ahead. They have to tool up and identify what materials are needed, and to negotiate with their purchasers any changes in the materials used. It is not straightforward to say, "Today we're using tetrapaks, tomorrow glass or

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card products." Such changes cannot be made overnight. The industry needs information. Why do the Government expect obligated parties to meet their obligations, when they do not know until three months into the year what the targets are on which they are being measured? That has been a problem, and does not provide a level playing field.

We saw DEFRA's initial proposals for 2002 targets in September 2001. They were 61 per cent. recovery and 20 per cent. material recycling. One can only assume that the figures were lowered because by that time, we already knew that we were not going to meet those targets. We need a formal consultation process between DEFRA and business to improve the system so that the 2006 targets can be met. Everything that I hear from businesses says that they want to comply, but they need the Government to tell them what they want and to give them an idea of how they can achieve it without crippling their industry. Such information is essential.

We have not discussed plastic recycling very much. Understandably, we have had an interesting debate on the use of glass or plastic between Members who have those interests in their constituencies. There are many issues around plastic recycling, especially that of plastic bags. Ireland has introduced an innovative scheme of charging for those bags. Much more could be done.

I agree with the hon. Member for Bexhill and Battle (Gregory Barker) that the recovery of plastics in the form of incineration is unacceptable, in my constituency or in his. The idea that energy from waste is the solution to many of our problems is not acceptable to the public at present, and I do not see that view changing. We must be much more canny over how to deliver recovered materials into alternate situations

Making a breakthrough on waste recycling is potentially a huge task. My background has been in working with local government asking people what they are doing to recover end-user packaging, to recycle it and reduce it. Those with whom I work spend their time saying that they do not want all this packaging, but people do not always recognise that some packaging is essential to preserve the quality of the goods in the way that people expect them to be delivered.

There are problems, and we need waste partnerships to achieve targets if we are to increase domestic waste recycling performances. At present, 11 million households are covered by local authority controlled kerbside programmes that collect domestic waste, but only 100,000 tonnes of packaging is collected. Some 300 local authorities have kerbside programmes of some sort, but they cover limited materials and not all households. Over a third collect only newspapers and pamphlets, which do not even qualify as packaging waste.

We need to ensure that between 1.2 and 2.7 megatonnes of additional packaging recovery takes place. We need a substantial increase in packaging recovery. We need to achieve an additional 500,000 tonnes of packaging recovery from household waste. To realise that figure would require the full participation of counties and 15 to 20 district authorities, but we want to make that happen nationally. We need far more material recycling facilities close to the point of use and

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collection, so that we do not prolong the problem of shipping materials somewhere else. We need investment of about £10 million of capital to start recovering such materials.

I went to see one of the plastics recovering companies in the midlands. It uses a variety of plastics, and has the process pretty well sorted. It was a very low-tech operation: about half a dozen people working in a barn, and producing plastics that form perfectly good drainage pipes and shields for underground cables, where it does not matter if the plastic is contaminated. Therefore, very little work has to be done to make those materials suitable for reuse. That company told me that it wants to take United Kingdom plastic, but because the Belgian market works much more effectively, it is cheaper to bring in that plastic. Despite that, the hon. Member for Bexhill and Battle has been explaining how plastic is being shipped out to China. There is something wrong about the business of moving waste across countries and oceans to do something with it.

When I go to my local bottle bank, I cannot get anything into the plastics part of the bank because it is always full. I asked my local authority why, and it told me that it already has to spend money to take plastics to the midlands, and it has to be careful with the limited amount of money it has for that resource. We need to ensure that plastics are recovered properly, in greater proximity to the point of collection and with more of a following wind.

I could ask the Minister many more questions, but he already has many on his desk and I recognise that Mr. Deputy Speaker wants to make space for those questions to be answered. Without Government support for the packaging industry in the ways I have outlined, we will continue to experience problems of incineration and landfill, which the public and the business do not want to see. I hope that I do not see it in the future.

10.38 am

Mr. Jonathan Sayeed (Mid-Bedfordshire): I congratulate the hon. Member for Normanton (Mr. O'Brien) on securing the debate, and on raising, as did the hon. Member for Barnsley, Central (Mr. Illsley), some very practical questions from the industry. I would also like to thank the hon. Member for Normanton for being so generous with his time, which has allowed every other Member who wanted to speak to do so.

My hon. Friend the Member for Bexhill and Battle (Gregory Barker) raised one of the most important questions and made the most obvious point, which is that the best way to reduce waste is not to produce it in the first place. That point keeps being made, but it is not often answered. The hon. Member for Linlithgow (Mr. Dalyell) posed in rather brief order what we might call the West Lothian question of domestic waste. I look forward to the Minister's answers to that conundrum and to why it is that there is so little kerbside collection and domestic waste segregation.

The Government's handling of the European packaging waste directive provides an example of their "leap before you look" environmental policy. It is easy and inviting to prove one's European credentials by signing up to regulations and directives but then to muddle through on the home implementation front, alienating domestic interest groups, failing to secure one's purpose and running up bills to the taxpayer.

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The key question is one of outcomes. How successfully have the regulations achieved their objectives? Can the Government fulfil their statutory obligations and attain the recovery and recycling targets, thus enabling the directive, which the Conservative party supports, to fulfil its purpose? How is the incentive to recycle to be created at the local level without over-regulation that simply increases bureaucracy and cost?

The directive is designed to prevent member states introducing measures that would act as a barrier to trade, to reduce the environmental impact of packaging and to establish economically efficient packaging recovery and recycling systems to enable member states to reach set targets. The challenge is to finance the expansion of the recycling industry and to make producers responsible for packaging waste, while not disrupting normal business activity.

In 1998, the UK achieved the lowest recovery and recycling rates of any member state: 33 per cent. and 28 per cent. respectively, compared with 89 per cent. for recovery in Denmark and 65 per cent. for recycling in Germany and Austria. From 1998 to 2001, the UK improved. It achieved recovery and recycling rates of 48 per cent. and 42 per cent., yet in 2001, as has already been stated, it missed the directive recovery rate of 50 per cent. and the Government's target of 52 per cent.

The regulations specify targets for the recovery and recycling of packaging waste as well as the essential requirements to be met by packaging placed on the market. They place on certain businesses three main obligations: to register with the Environment Agency and provide data; to take reasonable steps to recover and recycle packaging waste; and to certify that the necessary recovery and recycling has been carried out. The packaging recovery note system was established in 1997 to force manufacturers to take financial responsibility for the packaging waste that they produce. Since 1998, some £250 million for PRNs and packaging export recovery notes has been channelled to reprocessors through registration fees.

However, if the purpose is to increase the amount of packaging that is reused or recycled, there is little evidence to show that money has been invested to achieve it. There are three main problems with the system. First, no differentiation is made between different types of packaging waste. For instance, hemp-based packaging, which is easily biodegradable, is treated in the same way as polymer-based packaging. Manufacturers and retailers are thus given no incentive to investigate less environmentally damaging forms of packaging.

Secondly, packaging waste generators are not directly involved with the recycling process. Once they have paid a waste retrieval firm to absolve them of their PRN obligations, they can effectively wash their hands of the waste that they have generated. That encourages a cynical approach to recovery and recycling: businesses simply look for the cheapest way of absolving themselves of their PRN obligations.

Thirdly, the PRN system is often undermined by the existence of the packaging export recovery note system, which has been mentioned by other hon. Members. Under that scheme, it is often cheaper for a waste recovery firm to send collected waste materials abroad

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for recycling. The consequence of that—we have already talked about China—is that even the existing plastics recycling capacity in the United Kingdom is not fully utilised, so there is little incentive to build on it.

No doubt the Minister will talk about the increase in recycling. That is fair enough, but we must recognise that that increase has been in the easiest areas: the commercial and industrial sectors. That is because of a lack of investment in segregated household collection systems. Local authority recycling targets are based on weight, which means that newspapers and composting materials are prioritised above the lighter part of the waste—packaging. We have to meet higher packaging waste recycling targets over the next four years. To do so, we must extract additional packaging waste from the household waste stream and develop recycling markets. That will be achieved only if there is investment in household collection, sorting and reprocessing schemes.

Only 44 per cent. of households in English regions are served by segregated kerbside collection. According to the Packaging Federation, up to 80 per cent. of households in the United Kingdom would need such a scheme by the end of 2006 if the current European Union proposals were adopted. The suggested target levels for 2006 to 2008 will require between 1.2 million and 2.7 million tonnes of additional packaging recovery in the United Kingdom. That is a massive increase and the cost will be considerable. Even an extra 50,000 tonnes of packaging from household waste would require an investment of around £10 million. So even with the lowest figure of 1.2 million extra tonnes, we are talking about £240 million.

If the system does not produce the results that we want—and I have shown that it does not—we need to think about what should be done. Has the Minister considered a reward system for waste management? It would work on the basis of a matrix of the increasing non-biodegradability of waste materials—from paper to plastic—against the increasing adverse environmental impacts of different waste management options, from reuse and recycling to incineration and landfill. An increasing financial reward for the best waste management of the most non-biodegradable or environmentally damaging material would be offset by an increasing financial penalty for the worst waste management solutions. That would be a real incentive to recover and recycle, while rendering redundant the ineffective and costly PRN system, which fails to fulfil the purpose of the packaging waste regulations. It would also render the landfill tax redundant.

In order to achieve the objectives of the directive, the Government rely on the support of local authorities, private waste contractors and reprocessors, compliance scheme operators and the packaging industry. By upsetting each of those interest groups equally, the Minister may believe that he has achieved a balanced solution. If so, he is wrong. He has achieved a system that neither works well nor satisfies anyone. It is incumbent on the Government to ensure that we have a system that does what we want it to do, rather than a system that fails in so many ways.

10.49 am

The Minister for Rural Affairs (Alun Michael) : I congratulate my hon. Friend the Member for Normanton (Mr. O'Brien) on securing what has been an

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excellent and well-informed debate. I shall do my best to further inform the debate, but the Chamber will be aware that the subject comes under the portfolio of my right hon. Friend the Minister for the Environment, and my detailed knowledge falls far short of his.

Many short but complex questions have been asked in today's debate and they require lengthy answers. My hon. Friend the Member for Linlithgow (Mr. Dalyell) is the world's expert at encapsulating in the shortest question a challenge on a very complex issue. If I may, I shall seek to supplement my responses by writing to hon. Members where necessary. I want to focus on the serious issues raised by a number of Members, but I must start by chiding the hon. Member for Mid-Bedfordshire (Mr. Sayeed).

Mr. Sayeed : I thank the Minister for giving way. When he says that he will write to Members with specific answers, will he put those replies in the Library?

Alun Michael : Yes, I am happy to do so. May I now proceed to chide the hon. Gentleman? I want to make it clear to him that far from seeking to upset groups, the Government seek to work with all groups with a sense of urgency. That may put many people under pressure.

In his response, the hon. Gentleman should have said to the hon. Member for Bexhill and Battle (Gregory Barker) and to my hon. Friend the Member for Linlithgow why recycling and related issues are at a low in the United Kingdom. The hon. Member for Mid-Bedfordshire was a member of a Government who turned the muddled implementation of European directives into an art form. For 18 years, they did too little to tackle waste, which is why there is now a need for urgency and for pressure on the industry and local government to assist us in doing what is needed.

The hon. Member for Bexhill and Battle rightly acknowledged that this is the greenest Government that we have ever had. He was right to say that people want more to be done about waste, which is why it was so frustrating during the 1980s and 1990s for those of us who were concerned about the environment to see a Conservative Government doing so little about it. I saw work being done on waste and recycling in places such as Canada and Germany, and it was frustrating to return to this country to see so little being done, except for that done by voluntary organisations, such as the excellent organisation, Track 2000, in my constituency. I remember that that gained its first grant to begin its work in the early 1980s, very much on the basis of voluntary activity.

It is also worth pointing out that local authorities during that period were frustrated. The greater current level of engagement of local authorities with such issues is the result of having a Government who believe in partnership with regional and local government and the range of industries involved, and who are trying to draw all organisations together to get on with the job. The failure to do that over 18 years is why we face such a challenge and must improve the situation with a sense of urgency; it why we must set clear targets, and why we have a lower starting point than many other European countries—that was mentioned by several hon. Members.

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My hon. Friend the Member for Normanton raised a number of important issues. I want to reflect his serious and measured approach to opening the debate. He referred to the wide range of materials used in the packaging industry. He rightly outlined the relevance of the industry to constituency members, and therefore to people in all parts of the country. Although the impact of regulations on the industry is considerable, we must remember that what lies behind them is concern over the impact of waste from packaging on our economies, on the environment and on all of us as citizens. He rightly suggests that the Commission should consider issues such as transport and resource efficiency, to which several hon. Members have referred. They must be addressed in future as we consider how regulations and practice develop.

There are regional variations, but addressing regional issues, which are important, must not stand in the way of achieving consistency, fairness and national targets. Companies that seek to minimise their obligations may well reflect human nature and the nature of business. These are complex issues, but delay in making progress, or failure to make any, are not acceptable options.

I turn to the number of regulations and the nature of the regulatory body. I hope that we have succeeded in getting clear regulations. They have been in place since 1997 and are enforced by the Environment Agency in England and Wales and by the Scottish Environment Protection Agency in Scotland. Over time, those organisations have achieved a reputation for performing their key tasks—and, increasingly, for engaging industry in proper debate about undertakings.

I turn to the matter of the EC directive. When work is done on future directives, and on the implementation of them, the views of industry will be taken into account, particularly during the course of negotiations in Brussels. Full consultation will occur during those negotiations, and before regulations come into effect; that is one of the assurances that has been sought.

Reference was made to the need for strong industry representation on the Advisory Committee on Packaging. I am unsure whether a majority is always the best way to achieve that, but we need a good balance and the expertise of the industry. We are reviewing the membership of that committee. We hope to be able to announce the new membership shortly, and we will take into account the points that have been made in the debate.

The hon. Member for Mid-Bedfordshire and others talked about the timing of targets. That is a challenge. One of the difficulties is that, although consultation was issued last year on targets to be set for 2002, data from compliance schemes have been received since then. One has to know where one is, in order to know the position from which one seeks to move forward. Final targets could not be set until the data were finalised, but consultation has allowed business to plan for the new targets.

The hon. Member for Guildford (Sue Doughty) raised several issues. She is another hon. Member who is good at asking questions. She talked about avoiding excessive movement, and the need for the market to develop. It is clear that there is a great deal of movement that it might be possible to avoid in the longer term due to an accelerated period of development of the market.

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I was unsure of what to think about her suggestions with regard to interim monitoring and interim reporting. It is necessary to keep a finger on the way that things are developing, but it is possible to increase the amount of monitoring and the bureaucracy to such an extent that they get in the way of decisions that the industry should take.

The hon. Lady could have given a little more credit for what has been done. The UK narrowly failed to meet the recovery target of at least 50 per cent., but it met the recycling target and the material specific recycling target for all materials including plastic. The UK achieved just short of 48 per cent. recovery, with a shortfall against the target of just 195,000 tonnes. Therefore, the UK system has allowed us to move from a 30 per cent. recovery level in 1998 to a 48 per cent. level in 2001, and from about a 27 per cent. recycling level in 1998 to a 42 per cent. level. That is a considerable achievement, especially as it took only four years, and I pay tribute to the excellent performance of the majority of UK businesses. We will look with interest at the performance of Liberal Democrat local authorities, and the contribution that they made.

My hon. Friend the Member for Linlithgow talked about the increase in the recycling of waste, and the importance of recycling domestic waste. Household collection is being expanded, and the local authority role in that is critical. We are working closely with the Local Government Association to promote it. He referred to material specific and differential targets; however, it would be sensible for me to write to hon. Members who have asked questions about matters of such complexity.

My hon. Friend the Member for Chatham and Aylesford (Jonathan Shaw) rightly said that it is important to separate fact from myth, and to think of the developments as an opportunity, not a threat. They are certainly a challenge, but they are also an opportunity for us to get it right. It is worrying that some companies may not be aware of their obligations; we will do all that we can to make sure that companies are made aware of them. My hon. Friend is right to anticipate our wish to minimise red tape as well as emphasising the need to apply requirements more rigorously. I am sure that he will accept that that is a difficult balance to achieve.

Mr. Deputy Speaker : Order. It is time to move on to the next debate.

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